Nov. 15 (Bloomberg) -- Sony Corp., the Japanese electronics
maker reeling from four consecutive annual losses, plans to
raise 150 billion yen ($1.9 billion) from convertible bonds to
fund an expansion in its first sale of the security in almost a
decade.

Sony will sell zero-coupon convertible bonds maturing in
five years to fund acquisitions and the expansion of imaging-sensor facilities, the company said in a statement yesterday.
The conversion price was set at 957 yen, or 10 percent above
yesterday’s stock’s closing price in Tokyo.

The sale, the first convertible bond from Sony since 2003,
comes after the share price plunged as Sony suffers losses at
its main television business. Chief Executive Officer Kazuo
Hirai is cutting 10,000 jobs and selling assets as he focuses on
mobile devices, games and digital imaging to turn around Sony,
whose stock dipped to the lowest since 1980 this month.

“Convertible bonds was probably the only option for
Sony,” said Tadashi Fujii, an analyst at Fisco Ltd., a Tokyo-based research company. “Its credit ratings have been cut and
an equity finance would lead the shares to decline because of
the dilution.”

Conversion Price

The zero-coupon notes due in November 2017 may be exchanged
for stock if Sony’s shares rise above the conversion price.

Sony’s American depositary receipts fell 8.8 percent to
$9.82 at the close in New York. Sony, the maker of Cyber-shot
cameras and Bravia TVs, rose 1 percent to close at 870 yen in
Tokyo trading yesterday. The stock has slid 37 percent this year
after slumping 53 percent last year.

Sony, worth more than $120 billion in 2000, is now valued
at about $11 billion. Apple Inc. is valued at $511 billion and
Samsung Electronics Co. is at $184 billion.

The transaction will be the first convertible sale since
2003, according to Mami Imada, a spokeswoman for Sony.

The maker of PlayStation game consoles will use 60 billion
yen of the proceeds to invest in CMOS image sensors, 50 billion
yen to repay short-term debts for acquiring shares of Olympus
Corp., 10 billion yen to repay borrowings for acquiring Gaikai
Inc. and 30 billion yen to repay bonds maturing next year,
according to the statement.

Lead Underwriters

JPMorgan Chase & Co., Goldman Sachs Group Inc., Nomura
Holdings Inc. and SMBC Nikko Capital Markets Ltd. were hired to
manage the sale, which will be in overseas markets excluding the
U.S., according to the statement.

Sony last sold bonds in March, when it raised 55 billion
yen from a two-part offering including 45 billion yen of 0.664
percent five-year notes, not convertible to shares, priced at a
spread of 36 basis points more than government debt, according
to data compiled by Bloomberg.

Earlier this month, Sony had its credit rating cut to the
lowest investment grade by Moody’s Investors Service, which
cited falling demand for its TVs and cameras.

The long-term credit rating was cut one level to Baa3 from
Baa2, Moody’s said Nov. 9, assigning a negative outlook. The
short-term rating was cut to Prime-3, also the lowest investment
grade, from Prime-2.

Quarterly Loss

Earlier this month, Sony posted a quarterly loss of 15.5
billion yen, its seventh straight loss. The company kept its
forecast to report its first annual profit in five years.

Sony in August acquired Gaikai, a California-based company
with expertise in transmitting data between cloud servers and
users, for about $380 million as it prepares to expand cloud-based entertainment services. Cloud computing is among the focus
areas of Sony’s research and development, Shoji Nemoto, head of
Sony’s corporate research and development, said in August.

Sony sold a chemical-products making unit, stakes in two
display-making ventures and invested in Olympus to revive growth
after racking up 692 billion yen in losses selling TVs in the
past eight years.